The Union Budget is more than just numbers, taxes, and policies—it’s the backbone of India’s economic narrative, influencing the lives of millions while steering the nation’s growth. With the Union Budget 2025 around the corner, let’s explore why it matters, its historical significance, and what we can expect this time around.
Table Of Contents:
- Why the Union Budget is so important?
- When is Union Budget 2025?
- Union Budget 2024-25 highlights
- Union Budget 2025 Expectations
- How the Union Budget Impacts YOU?
- FAQs
Why the Union Budget is so important?
At its core, the Union Budget is like a roadmap for India’s economic future. It touches every aspect of our lives—whether it’s the food on your plate, the roads you drive on, or the taxes you pay. But why is it such a big deal? Here are some reasons:
- Efficient Allocation of Resources: The government needs to make the most of its resources, and the budget ensures just that. It prioritizes sectors like infrastructure, education, and healthcare, ensuring that every rupee spent benefits the people and the economy.
- Reducing Unemployment and Poverty: Job creation and poverty alleviation are at the heart of every budget. From rural employment programs to skill development initiatives, the budget ensures that no one is left behind.
- Bridging Wealth Gaps: Let’s face it, income disparity is a challenge in India. The budget addresses this through progressive taxation—higher taxes for the wealthy and subsidies for the underprivileged. This redistribution of wealth ensures economic fairness.
- Controlling Price Fluctuations: Inflation and deflation can wreak havoc on any economy. The Union Budget plays a key role in stabilizing prices by implementing policies like surplus budgets during inflation and deficit budgets during deflation.
- Tweaking the Tax Structure: Every year, the Union Budget revisits tax slabs and brackets, impacting your take-home pay and purchasing power. It’s not just about taxes—it’s about creating an environment that fosters savings, investments, and spending.
When is Union Budget 2025?
The government is set to announce the Union Budget 2025-26 on 1st February 2025 at 11 am which is a Saturday. The NSE and BSE will keep stock markets open on Saturday for the Union Budget with equity markets having a regular trading session until 3.30 PM. Finance Minister Nirmala Sitharaman will present her eighth consecutive Union Budget this year.
The current budget comes just 6 months after the last one, announced in July 2024 post-elections. The Union Budget, presented annually, provides an overview of the government’s financial health by outlining estimated expenditures and revenues.
It also highlights new financial schemes and plans the Centre intends to implement in the upcoming fiscal year.
The Union Budget will be presented on the backdrop of a cyclical growth slowdown led by weaker urban consumption, slower credit growth, Lower GDP growth estimates and a decline in government capex in H1FY25.
As of April – Nov 2024, the country has utilized 42 pct of the budgeted capital expenditure had been utilized against 58.5 pct in last year. The country needs to expand its capex by 65 pct YoY in December 2024 – March 2025 or a monthly run rate of Rs. 1.5 Trillion to achieve the FY25E target of 11.1 trillion.
However, it is expected that the government may miss the FY25 target by Rs. 1.4 trillion (Rs. 9.7 trillion in 2025 expected).
Union Budget 2024-25 Highlights
Before diving into what 2025 holds, let’s take a quick look at the 2024 highlights.
The 2024 budget focused on building resilience in agriculture, infrastructure, and job creation. Key highlights included ₹1.52 trillion allocated for climate-resilient crops, support for shrimp farming with custom duty exemptions and NABARD financing, increased capital expenditure in transportation and green energy, and employment-linked incentives for skill development.
The upcoming 2025 budget is expected to continue emphasizing skill development, employment generation, agriculture, welfare schemes, rural housing, and job creation. For more details, check out our blog, Union Budget 2024-25.
Union Budget 2025 Expectations
The upcoming budget is expected to bring some macro stability by supporting growth while managing inflation. Moreover, the RBI monetary policy in Feb’25 will also be critical in shaping interest rate trends.
As the Union Budget 2025 approaches, the government targets Rs 11.2 lakh crore capex in 2025-26 largely flat and to remain at 3.1 pct of GDP in FY26 while the Government may set a fiscal deficit target at 4.5 pct in Budget 2025-26 (4.9 pct in this Fiscal) as it is likely to stay on the fiscal consolidation path.
- Infrastructure:
India aims to achieve a USD 30 trillion economy by 2047 to achieve this target, capital spending has increased from 1.63 pct of GDP in FY2019 to 3.4 pct in FY2025. However, the government to maintain its strong commitment to infrastructure investment, recognising it as a key driver of broader economic growth. - Railway:
Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Ministry of Railways plans to equip 10,000 train engines with advanced safety systems and upgrade 5,000-5,500 KM of track annually over the next two years. The government may increase the railway budget by 15-18 pct in FY2026 to Rs. 3 trillion from the current Rs. 2.65 trillion. - Defence:
In rising geopolitical escalations and the growing importance of reducing reliance on imports, the allocation for the Ministry of Defence (MoD) in the upcoming Union Budget for the FY26 is unlikely to see any major shift and is expected to remain between 1.9 and 2 pct of GDP. - Telecoms:
government is considering a potential partial waiver of AGR dues, which could reduce the liabilities of telecom player by Rs. 900 bn. - Real Estate:
The limit on tax deduction on interest paid can be increased from the current Rs 2 lakh to about Rs 4-5 lakh in case of LoP and Revival of the Credit Linked Subsidy Scheme (CLSS) for first-time homebuyers is expected from the budget. - Energy:
As India transitions towards net zero economies and commits to Generating 500 GW of renewable energy by 2030, the union budget is expected to give the Government is expected to invest in alternate energy (e.g., green hydrogen generation), upgrade infrastructure (e.g., BEES infra and smart grid technologies), and build mega solar/wind parks and green energy corridors. - Water Treatment:
Considering the increasing water demand and climate change impact, the water sustainability and management sector is expected to receive some allocation in order to achieve water security and sustainable management. - Tourism and Hospitality:
The hospitality sector anticipates measures that stimulate private investment and consumer spending through targeted tax relief, aiming to boost disposable income and overall economic activity. - FMCG:
As the FMCG industry is experiencing a slowdown, an uptick in basic income tax exemption and an uptick in standard deduction can raise 5-7 pct disposable income which can lead to a 6 pct rise in consumer spending in FMCG and other essential goods. - Manufacturing:
Sectors like green energy, semiconductors, and EVs are anticipated to benefit from enhanced PLI allocations, potentially ranging from Rs. 300 bn to Rs. 400 bn while the Drone ecosystem, Lithium-Ion cell ecosystem, BEES cell, footwear & leather are expected to benefit from PLI allocation of Rs. 5 bn, Rs. 80 bn, Rs. 45 bn and Rs. 26 bn. aligning with India’s push for sustainable and technology-driven growth.
Announcement expected related to Taxation
This time around there is a lot of expectation around personal income tax. There is an expectation that the government will simplify and reduce litigation, further promoting the new tax regime’s adoption.
There are widespread opinions that income tax slabs should be enhanced as the current framework disproportionately burdens higher-income taxpayers. Key expectations also include a dedicated tax deduction for life insurance premiums under Section 80C and increasing the limit for 80D.
With the government’s goal of achieving “Insurance for All” by 2047, the 2025 Union Budget is anticipated to introduce several initiatives aimed at boosting the insurance sector. The insurance industry has called for a reduction in the GST rate on life insurance premiums. The current GST rate is 18 pct.
How the Union Budget Impacts YOU?
You might think the Union Budget is all about high-level policies, but its ripple effect impacts you directly. Here’s how:
- Taxes: Changes in income tax slabs impact your disposable income.
- Prices: Policies on inflation/deflation affect the cost of essentials like groceries and fuel.
- Jobs: Investments in infrastructure and skill development can create employment opportunities.
- Home Loans: Revised tax benefits can reduce your EMIs.
- Savings: New deductions under Sections 80C, 80D, or tax-free investment options can boost your savings.
Looking Ahead: The Big Picture
The Union Budget is more than just a policy document—it’s a reflection of the country’s aspirations and priorities. Whether it’s about spurring economic growth, creating jobs, or promoting welfare, every number, every policy, has a story to tell.
As India gears up for Budget 2025, one thing is certain: all eyes will be on how the government balances growth and fiscal prudence. Whether you’re an entrepreneur, a salaried employee, or a homemaker, the budget will have something in store for you.
What’s Next?
As we await February 1, 2025, now’s the time to plan and prepare. If you’re wondering how the budget might impact your finances or investment plans, don’t hesitate to reach out. Let’s decode the numbers together!
Frequently Asked Questions
What is the Union Budget date and time for 2025?
The Union Budget 2025 will be presented on February 1, 2025, at 11 AM.
What Is the Difference Between Union Budget & Interim Budget?
| Aspect | Union Budget | Interim Budget |
| Definition | Comprehensive financial plan for a full year | Temporary budget presented before elections |
| Duration | Covers the entire fiscal year | Covers only a few months |
| Proposals | Includes long-term policies and reforms | Primarily maintains essential expenditures |
What is the significance of the Union Budget in India?
It outlines the government’s financial priorities, driving economic growth and welfare while maintaining fiscal discipline.
How does the Union Budget differ from an Interim Budget?
The Union Budget covers the entire fiscal year with detailed plans, whereas the Interim Budget is a temporary arrangement before elections.
What is the Halwa Ceremony?
Every year, prior to the start of the budget’s “lock-in” phase, the Halwa ceremony is held to commemorate the conclusion of budget development. By custom, everyone participating in the budget-making process is fed an Indian sweet dish prepared in a sizable “kadhai” (vessel) at the North Block.
